The United States International Trade Commission just gave notice that it will review in part -- actually, in many parts -- a preliminary ruling that held Apple to infringe a wireless standard-essential patent (SEP) held by Google subsidiary Motorola Mobility.
Based on the review notice, Apple now has a realistic chance of avoiding an import ban, but Motorola's own petition for review has also been granted in some respects.
The good news for Apple is that the Commission, the six-member decision-making body at the top of the ITC, is going to look into a couple of questions affecting both the infringement and the (in)validity analysis concerning the patent that Administrative Law Judge Thomas Pender deemed valid and infringed. There is also a possibility of the Commission overruling Judge Pender with respect to Motorola's own use of that patent (only a patent holder who satisfies the domestic industry requirement can win an ITC exclusion order).
What could be even more important, especially with a view to other pending ITC investigations: eight of the Commission's 13 review questions relate to the implications of a FRAND licensing obligation to the potential entry of an exclusion order. The first of those questions relates to whether Apple somehow waived its right to raise the FRAND defense, but other questions relate to the possibility of a patent holder being generally barred from seeking an import ban over a FRAND-pledged standard-essential patent. These are the FRAND-related questions (the Commmission refers to RAND, a synomym):
6. Has Apple waived its right to assert that Motorola failed to offer a license on reasonable and non-discriminatory (“RAND”) terms? In discussing this issue, please refer to Commission Investigative Staff Motion in Limine to Exclude The Expert Opinion of Jerry Hausman filed July 14, 2011, and to Respondent Apple Inc.’s Opposition to Commission Investigative Staff's Motion In Limine to Exclude the Expert Opinion of Robert O’Hara at page 1, n. 1 filed July 22, 2011.
7. If the record of an investigation lacks evidence sufficient to support a RAND-based affirmative defense (e.g., equitable estoppel, implied license, waiver, etc.), under what circumstances (if any) should a RAND obligation nonetheless preclude issuance of an exclusion order? Please discuss theories in law, equity, and the public interest, and identify which (if any) of the 337(d)(1) public interest factors allegedly precludes issuance of such an order.
8. Does the mere existence of a RAND obligation preclude issuance of an exclusion order? Please discuss theories in law, equity, and the public interest, and identify which (if any) of the 337(d)(1) public interest factors allegedly precludes issuance of such an order.
9. Should a patent owner that has refused to offer a license to a named respondent in a Commission investigation on a RAND obligated patent be able to obtain an exclusion order? Please discuss theories in law, equity, and the public interest, and identify which (if any) of the 337(d)(1) public interest factors allegedly precludes issuance of such an order
10. Should a patent owner that has refused to offer a license on a RAND obligated patent to some entity (regardless of whether that entity is a named respondent in a Commission investigation) be able to obtain an exclusion order? Please discuss theories in law, equity, and the public interest, and identify which (if any) of the 337(d)(1) public interest factors allegedly precludes issuance of such an order.
11. Should a patent owner that has refused to negotiate a license on RAND terms with a named respondent in a Commission investigation be precluded from obtaining an exclusion order? Please discuss theories in law, equity, and the public interest, and identify which (if any) of the 337(d)(1) public interest factors allegedly precludes issuance of such an order.
12. Should a patent owner that has refused to negotiate a license on RAND terms with some entity (regardless of whether that entity is a named respondent in a Commission investigation) be precluded from obtaining an exclusion order? Please discuss theories in law, equity, and the public interest, and identify which (if any) of the 337(d)(1) public interest factors allegedly precludes issuance of such an order.
13. Should a patent owner who has offered a RAND license that the named respondent in a Commission investigation has rejected be precluded from obtaining an exclusion order? Please discuss theories in law, equity, and the public interest, and identify which (if any) of the 337(d)(1) public interest factors allegedly precludes issuance of such an order.
In addition to those eight FRAND questions, the Commission also raises two questions that could lead to a conclusion that injunctive relief in the form of an import ban is not warranted:
4. With regard to the ‘697 and ‘223 patents, are there substantial costs and delays associated with switching away from the standardized technology in question?
5. With regard to the ‘697 and ‘223 patents, do the patents in question cover relatively minor components of the accused products?
These questions don't suggest what the decision will look like, but it's interesting that the ITC is now looking very closely at theories that could result in the denial of an exclusion order even if a violation is identified. In other words, the ITC is looking at the implications of injunctive relief more comprehensively, and it may increasingly base its analysis on at least some of the factors that federal courts consider under the eBay v. MercExchange test for patent injunctions.
In connection with the investigations of Motorola's complaints against Microsoft and Apple, statements on the public interest have been filed, especially (though not exclusively) over FRAND issues, by major stakeholders, even including lawmakers (formally only in the Microsoft case, but with implications also for the Apple case). In the Apple case, the ITC's review notice acknowledges submissions from the following non-parties: Federal Trade Commission; Business Software Alliance; Association for Competitive Technology; Retail Industry Leaders Association; Verizon; Nokia Corporation; Hewlett-Packard Company; and Microsoft Corporation. And the Commission is now going to look very closely at the issues that have been raised. As I said before, eight of the 13 review questions relate to FRAND, and two more relate to equitable considerations that could stand in the way of the entry of an exclusion order.
The ITC is also going to review some questions with respect to three Motorola patents that the ALJ did not deem violated. I have yet to analyze whether the scope of the review suggests that the final decision could, apart from FRAND and injunctive relief issues, be even more favorable to Motorola than the preliminary ruling, but at first sight I think there's at least one more patent on which Motorola could prevail. I will look at this more closely when the parties' answers to the Commission's questions become available.
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